U.S. energy head seeks help for coal, nuclear power plants

(Reuters) - U.S. Secretary of Energy Rick Perry has asked federal regulators to attempt to keep the nation’s struggling coal and nuclear power plants open by rewarding them for contributing to the resilience of the electric grid, the Department of Energy said on Friday.

U.S. Energy Secretary Rick Perry attends the opening of the International Atomic Energy Agency (IAEA) General Conference at their headquarters in Vienna, Austria September 18, 2017. REUTERS/Leonhard Foeger

The move drew praise from the coal and nuclear power industries. But it raised alarm bells among renewable energy groups and environmentalists concerned that such incentives were unfair and could lead to an increase in emissions from coal plants linked to global warming and more toxic waste from nuclear plants before a permanent repository is built for the country.

“The continued closure of traditional baseload power plants calls for a comprehensive strategy for long-term reliability and resilience,” Perry said in a Sept. 28 letter to the Federal Energy Regulatory Commission (FERC).

“States and regions are accepting increased risks that could affect the future reliability and resilience of electricity delivery,” he wrote.

Perry asked FERC to issue a rule within 60 days to allow certain baseload plants that maintain at least 90 days of fuel supply on site to recover their full costs through regulated pricing.

A FERC official did not immediately respond to a request for comment.

The Trump administration has previously said the retirement of hundreds of coal-fired power plants and some nuclear reactors in recent years had undermined the ability of the grid to stand up to peak-demand periods, including during severe cold winter weather. It has also criticized wind and solar power, both expanding rapidly, as being too heavily dependent on weather.

Perry commissioned a study in April to evaluate whether “regulatory burdens” imposed by past administrations, including that of former President Barack Obama, had hurt the grid by forcing shutdowns of baseload plants.

That report, released last month, urged that incentives be used to boost coal-fired and nuclear plants, and blamed recent closures on competition with cheaper natural gas and growth of solar and wind power.

Maria Korsnick, head of the Nuclear Energy Institute, praised Perry’s request. “In the wake of the incredible disruptions caused by extreme weather events in recent years, including multiple hurricanes and polar vortices, the urgency to act in support of the resiliency of the electric grid has never been clearer,” she said.

But powerful natural gas and renewable power interests warned the proposal may go too far. The American Wind Energy Association blasted the effort, saying it would “upend competitive markets.”

“The best way to guarantee a resilient and reliable electric grid is through market-based compensation for performance, not guaranteed payments for some, based on a government-prescribed definition,” AWEA spokeswoman Amy Farrell said.

Marty Durbin, the executive vice president and chief strategy officer at the American Petroleum Institute, which counts natural gas drillers among its members, said Perry’s proposal appears to suggest that more regulation is the answer, when markets have already made the grid stronger.

“We need to be careful that government doesn’t put its thumb on the scale,” Durbin said. “It’s better to let markets choose, which is what the United States is seeing with the growth of natural gas as the United States’ leading energy source for electricity in 2016.”

The proposal was blasted by New York’s Attorney General Eric Schneiderman as a “head-in-the-sand approach” that would undermine grid resiliency while promoting climate change.

The Trump administration is expected to soon take additional steps to help struggling coal plants. As soon as next week, the Environmental Protection Agency is expected to release a revised Clean Power Plan that would be softer on emissions from coal.

Reporting by Nallur Sethuraman in Bengaluru and Timothy Gardner in Washington; Editing by Marguerita Choy and Paul Simao